Case 3
Case Study
‘Blu-ray versus HD-DVD: A Standards Battle in High-Definition Video’
Discussion Questions
1. What factors do you think influenced whether (1) consumers, (2) retailers or (3) movie producers supported Blu-ray versus HD-DVD?
Every party in this standards battle had its own reasons for chosing one standard over the other. For instance, the motives for movie producers to choose Blu-ray were completely different from the motives for consumers to choose Blu-ray.
In our opinion, the main factors that influenced (1) consumers in their decision to support either Blu-ray or HD-DVD were technical differences, complementary goods and the size of the installed base. Supporting one of the standards, from a consumer-perspective, can be defined as buying a Blu-ray- or an HD-DVD-player.
Roughly, the consumers can be divided into two groups: Early adopters and the majority.
Early adopters gave their support to one of the standards based on technical differences and complementary goods. In this case, early adopters are consumers who are interested in technology and do their own research about what is the ‘better’ standard. The complementary goods are the number of movies released on one of the standards, which obviously is also important.
The majority based their decision on the size of the installed base and also the complementary goods. Again, the number of movies is important, but for the majority the size of the installed base of one of the formats is most important. The benefits of a technology can only be observed after a certain critical mass of users has been achieved. (Suarez, 2004). This means that it was a race to the tipping point of the installed base. When this was reached by one of the formats, the race would have been won and this format would become the dominant format.
Eventually, the decision from Sony, to incorporate a Blu-ray-player into their Playstation 3, which essentially came down to giving away Blu-ray-players for free, turned
‘Blu-ray versus HD-DVD: A Standards Battle in High-Definition Video’
Discussion Questions
1. What factors do you think influenced whether (1) consumers, (2) retailers or (3) movie producers supported Blu-ray versus HD-DVD?
Every party in this standards battle had its own reasons for chosing one standard over the other. For instance, the motives for movie producers to choose Blu-ray were completely different from the motives for consumers to choose Blu-ray.
In our opinion, the main factors that influenced (1) consumers in their decision to support either Blu-ray or HD-DVD were technical differences, complementary goods and the size of the installed base. Supporting one of the standards, from a consumer-perspective, can be defined as buying a Blu-ray- or an HD-DVD-player.
Roughly, the consumers can be divided into two groups: Early adopters and the majority.
Early adopters gave their support to one of the standards based on technical differences and complementary goods. In this case, early adopters are consumers who are interested in technology and do their own research about what is the ‘better’ standard. The complementary goods are the number of movies released on one of the standards, which obviously is also important.
The majority based their decision on the size of the installed base and also the complementary goods. Again, the number of movies is important, but for the majority the size of the installed base of one of the formats is most important. The benefits of a technology can only be observed after a certain critical mass of users has been achieved. (Suarez, 2004). This means that it was a race to the tipping point of the installed base. When this was reached by one of the formats, the race would have been won and this format would become the dominant format.
Eventually, the decision from Sony, to incorporate a Blu-ray-player into their Playstation 3, which essentially came down to giving away Blu-ray-players for free, turned